Monday, July 05, 2010

Primary Market Sell signal

I have been monitoring the markets the past month but have been reticent to write an update until a resolution to the ongoing trading range was resolved. That was done on Tuesday last week.


SPX 6 month daily:



On Tuesday it can be seen price broke for the 1st time on a daily closing basis below the consolidation zone that had been established for the past 4+ months.

The short term chart is BEARISH but oversold and overdue for a short term bounce.


SPX PNF traditional:



The Point and Figure chart turned bearish on a price print of 1040. It now has a projected target of 900 and is BEARISH.


SPX 3 year weekly:



The weekly chart broke this past week through a support line that was established all the way back to Nov, 2009.

All medium term technical indicators are bearish with the exception of the On Balance Volume which has yet to break it's last line of support.

The medium term chart is BEARISH.


SPX 11 year monthly:



The monthly chart closed the month of June below the 12 month SMA. The other technical indicators are neutral-bearish and are rolling over into bearish conditions.

The long term charts have turned BEARISH.


BOTTOM LINE:

The markets had exhibited a significant amount of strength the past year but have signaled they are now entering into a bear market correction phase.

The degree to which this correction will take unfold is unknown but in a future blog I will publish my anticipated targets. In the short term (given my personal time constraints), I thought it prudent to get out this short blog asap.

I will be moving my Emirates Provident portfolio back into 100% cash position to preserve capital. The daily charts are oversold so I am expecting a short term bounce to alleviate the current oversold condition. I will hold my current positions but sell into any significant rally.

The ECAM Asset Allocation Fund is currently in a 20% invested/80% cash positioning (long 10% bonds, 5% TIP's and 5% gold stocks) as it is able to respond to market conditions on a much more rapid basis. Based upon market signals, the ECAM fund will rotate into a 50% short market position on any significant rally.


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dwaynemalone1@gmail.com

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